LIC Housing Finance registered a net profit of Rs 1,432 crore, up 23.1% from Rs 1,163 crore in the same quarter last year. However, net interest income (NII) was Rs 1,997.1 crore, down by 4.8% from Rs 2,097 crore in Q3 FY24. Furthermore, Nomura observed that the profit beat largely came through provision write-backs of Rs 250 crore in the quarter. The brokerage also highlighted that NII was 3% lower than expected due to a slowdown in AUM growth, a reduction in NIMs, and elevated operating expenses. The company has now moved from growth-oriented focus toward margin-based focus.

Despite rate cuts, LIC Housing Finance believes that it will continue to maintain its margins owing to the foray into the affordable segment, a 10-bps increase in PLR, assets moving from non- performing to performing, and growth in another project loan portfolio with higher yieldsThe stock was corrected by around 14% over the last three months as the Nifty 50 index got corrected by 3.5% and is now available at reasonable valuations. On this basis, Nomura has increased its target price for LIC Housing Finance from Rs 700 to Rs 735 and maintained its "buy" call with a potential upside of 31%.

HSBC has upgraded LIC Housing Finance to "hold", revising the target price to Rs 600 per share. The company suffers market share losses with pricing pressures, yet lower credit costs relieve some earnings challenges. HSBC has also factored in an upgrade for its EPS estimates, due principally to asset quality improvements; however, the stock has corrected meaningfully in the recent past.